The Co-operative Bank is offering homeowners with an interest only mortgage the chance to transfer to a repayment mortgage or extend their loan term without incurring the standard fee of £50.

Customers have three choices, to switch, overpay or extend, the lender said.

Borrowers can choose to convert the outstanding balance of their loan to a capital and repayment mortgage over a suitable term up to a maximum age of 75 years at the end of the term.

Alternatively, making additional repayments could cut mortgage balances more quickly than on a current interest only plan, reducing both the amount outstanding on their loan as well as the amount of interest payable each month.

However, early repayment charges may apply on overpayments, so mortgage holders would need to check terms and conditions.

The third option is to extend the interest only mortgage term, giving borrowers more time to ensure sufficient funds are in place to repay the mortgage balance by the end of the new term.

James Hillon, head of mortgages at The Co-operative, said: “There are a number of ways customers can close the gap between their outstanding mortgage balance and the value of their current investment.”

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